Trump’s distractions allow for huge tax heist

Democratic House Minority Leader Nancy Pelosi and two other key Democrats blasted GOP tax and budget proposals on Capitol Hill, saying most of the cuts will benefit the wealthiest Americans at the expense of children and working families. (Oct. 25)
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President Donald Trump spoke to a gathering of supporters at Loren Cook Company on Wednesday, Aug. 30, 2017, in Springfield, Mo.(Photo: Bryon Houlgrave/The Register)Buy Photo

The Trump bomb is hugely damaging — unleashing hate, threatening democratic institutions, isolating America in the world. But none of this seems to bother Republicans in Congress, except for a handful of senators who won’t be running again. That’s because congressional Republicans are concentrating their efforts on pulling off the giant heist for their rich patrons.

They want to move quickly so no one notices — passing the tax cut before Christmas, with no hearings and minimal debate.

If the plot succeeds, most Americans will be robbed in three ways.

First, they’ll lose tax deductions they rely on — such as the deduction on earnings they put into tax-deferred savings in 401(k) plans. Some 55 million Americans now rely on 401(k) plans to save for retirement.

They’ll also lose the deduction for what they pay in state and local taxes. More than half of this deduction now goes to taxpayers with incomes of less than $200,000.

Republicans say the middle class will come out just fine because it will get a larger standard deduction. Not true. The average American’s tax bill will rise because the deductions lost will total more than the higher standard deduction that Republicans are proposing.

Second, most Americans will lose government services that will have to be eliminated in order to pay for the giant tax cut — including, very likely, some Medicare and Medicaid.

More than $1.3 trillion in cuts to Medicare, Medicaid and Obamacare were quietly included in the budget resolution Republicans just passed so that they could get their tax bill through the Senate with just 51 votes. (No one paid much attention because Trump was attacking grieving combat widows.)

Third, most Americans will have to pay higher interest rates on their car and mortgage loans and other money they borrow, because the huge tax cut will explode the national debt.

That debt is now around $20 trillion, or roughly 77 percent of the total economy. If it goes much higher, it will crowd out borrowing and force interest rates upward.

Putting all this together, the theft would be the largest redistribution from the bottom 90 percent to the richest 1 percent in history.

Robert Reich, a former U.S. Secretary of Labor, is professor of public policy at the University of California at Berkeley.